Ann: Presentation - RIU Fremantle, page-81

I do feel for JP, he's doing his utmost and there's a lot of things outside of his control, the Li price for one, and the length of time that Glencore are/may continue to take on due diligence as another. The photo comparing 2019 versus 2024 speaks volumes about what they've achieved. That said, his comment about Galan being profitable in 2025 based on current prices somewhat misses the point for me. Before then, they still have to get around US$90M of funding. To me, the issue isn't whether Galan's finished stage 1 will be able to make money once constructed, it's whether at current forecast analyst commodity prices the phase 1 NPV makes sense versus the required capex. If the amount of capex required (including sunk capex) is more than the re-run Phase 1 NPV, then it doesn't look nearly as attractive to a lender. The risk is much higher, and so their required interest rate must be too.

JP's line in the presentation is akin to saying "assuming we sort all the finance, we'll still be profitable at these prices in a year's time". Yes, if opex stays at US$3,963/t then that's technically correct, but there's still a lot that investors don't have visibility over. For example, they might be operationally 'profitable', but how much is left over after annual interest repayments, for one thing? If they do go ahead and borrow US$90M (A$138.4M) let's say at a rather competitive rate of 10% p/a, then there's going to be annual interest payments of A$13.8M p/a, never mind principal as well. If the interest rate was 12%, it's A$16.6M p/a, and at 15% it's A$20.7M p/a - again, not counting the principal. That's why when you look at @daando37's model earlier in the thread, he is deducting interest costs of US$15.6M p/a/ (presumably including interest and principal) and ending up with earnings after tax of just US$6.5M (and it's actually lower than that as corporate tax is 35%, not 30%). It's a far cry from the numbers in the DFS! The collapse in analyst's forward-looking Li forecasts has dramatically moved the goalposts - but unfortunately the capex stays the same.